Adopting developed-country technology is one way for less-developed countries to catch up with the growth of more-developed countries. However, in comparison to developing countries, developed countries are capital-rich and labor-short. Consider the types of technology that a typical developing country with limited capital and a large unemployed labour force would encounter when "shopping" for technology in a more developed country. As an example, the Japanese have pioneered robotics, such as assembly line machines. Such machines are intended to replace expensive workers with capital (robots) in order to reduce overall production costs.  In what ways does it help a developing country to transfer and use a new technology in its country? What are the costs?

Devon Harris Company sells 10% bonds having a maturity value of $2,000,000 for$1,855,816. The bonds are dated January 1, 2017, and mature January 1, 2022. Interest is payable annually on January 1.

Set up a schedule of interest expense and discount amortization under the straight-line method. (Round answers to the nearest cent.)

On April 1, 2017, Seminole Company sold 15,000 of its 11%, 15-year, $1,000 face value bonds at 97. Interest payment dates are April 1 and October 1, and the company uses the straight-line method of bond discount amortization. On March 1, 2018, Seminole took advantage of favorable prices of its stock to extinguish 6,000 of the bonds by issuing 200,000 shares of its$10 par value common stock. At this time, the accrued interest was paid in cash. The company’s stock was selling for $31 per share on March 1, 2018.

Instructions Prepare the journal entries needed on the books of Seminole Company to record the following.

• a. April 1, 2017: issuance of the bonds.
• b. October 1, 2017: payment of semiannual interest.
• c. December 31, 2017: accrual of interest expense.
• d. March 1, 2018: extinguishment of 6,000 bonds. (No reversing entries made.)

On April 1, 2020, Seminole Company sold 15,000 of its 11%, 15-year, $1,000 face value bonds at 97. Interest payment dates are April 1 and October 1, and the company uses the straight-line method of bond discount amortization. On March 1, 2021. Seminole took advantage of favorable prices of its stock to extinguish 6,000 of the bonds by issuing 200,000 shares of its$10 par value common stock. At this time, the accrued interest was paid in cash. The company's stock was selling for $31 per share on March 1, 2021.

Instructions

Prepare the journal entries needed on the books of Seminole Company to record the following.

a. April 1, 2020: issuance of the bonds.

b. October 1, 2020: payment of semiannual interest.

c. December 31, 2020: accrual of interest expense.

d. March 1, 2021: extinguishment of 6,000 bonds. (No reversing entries made.)

Presented below are selected transactions on the books of Simonson Corporation.

• May 1, 2017    Bonds payable with a par value of $900,000, which are dated January 1, 2017, are sold at 106 plus accrued interest. They are coupon bonds, bear interest at 12% (payable annually at January 1), and mature January 1, 2027. (Use interest expense account for accrued interest.)

• Dec. 31           Adjusting entries are made to record the accrued interest on the bonds, and the amortization of the proper amount of premium. (Use straight-line amortization.)

• Jan. 1, 2018    Interest on the bonds is paid.

• April 1            Bonds with par value of$360,000 are called at 102 plus accrued interest, and redeemed. (Bond premium is to be amortized only at the end of each year.)

• Dec. 31          Adjusting entries are made to record the accrued interest on the bonds, and the proper amount of premium amortized.

Prepare journal entries for the transactions above (Round to two decimal places.).

On January 1, 2020. Avery Co. borrowed and received $400,000 from a major customer evidenced by a zero-interest-bearing note due in 3 years. As consideration for the zero-interest-bearing feature, Avery agrees to supply the customer's inventory needs for the loan period at lower than the market price. The appropriate rate at which to impute interest is 8%.

Instructions

a. Prepare the journal entry to record the initial transaction on January 1, 2020. (Round all computa- tions to the nearest dollar.)

b. Prepare the journal entry to record any adjusting entries needed at December 31, 2020. Assume that the sales of Avery's product to this customer occur evenly over the 3-year period.

Holiday Company issued its 9%, 25-year mortgage bonds in the principal amount of $3,000,000 on January 2, 2006, at a discount of$150,000, which it proceeded to amortize by charges to expense over the life of the issue on a straight-line basis. The indenture securing the issue provided that the bonds could be called for redemption in total but not in part at any time before maturity at 104% of the principal amount, but it did not provide for any sinking fund.

On December 18, 2020, the company issued its 11%, 20-year debenture bonds in the principal amount of $4,000,000 at 102, and the proceeds were used to redeem the 9%, 25-year mortgage bonds on January 2, 2021. The indenture securing the new issue did not provide for any sinking fund or for redemption before maturity.

Instructions

a. Prepare journal entries to record the issuance of the 11% bonds and the redemption of the 9% bonds.

b. Indicate the income statement treatment of the gain or loss from redemption and the note disclosure required.

On June 30, 2017, Mischa Auer Company issued $4,000,000 face value of 13%, 20-year bonds at$4,300,920, a yield of 12%. Auer uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and -December 31.

Instructions (Round answers to the nearest cent.)

• a. Prepare the journal entries to record the following transactions. (1) The issuance of the bonds on June 30, 2017. (2) The payment of interest and the amortization of the premium on December 31, 2017. (3) The payment of interest and the amortization of the premium on June 30, 2018. (4) The payment of interest and the amortization of the premium on December 31, 2018.
• b. Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2018, balance sheet.
• c. Provide the answers to the following questions. (1) What amount of interest expense is reported for 2018? (2) Will the bond interest expense reported in 2018 be the same as, greater than, or less than the amount that would be reported if the straight-line method of amortization were used? (3) Determine the total cost of borrowing over the life of the bond. (4) Will the total bond interest expense for the life of the bond be greater than, the same as, or less than the total interest expense if the straight-line method of amortization were used?

In a manufacturing process the assembly line speed (feet per minute) was thought to affect the number of defective parts found during the inspection process. To test this theory, managers devised a situation in which the same batch of parts was inspected visually at a variety of line speeds. They collected the following data.

$$\begin{matrix} \text{ } & \text{Number of Defective}\\ \text{Line Speed} & \text{Parts Found}\\ \text{20} & \text{21}\\ \text{20} & \text{19}\\ \text{40} & \text{15}\\ \text{30} & \text{16}\\ \text{60} & \text{14}\\ \text{40} & \text{17}\\ \end{matrix}$$

Develop the estimated regression equation that relates line speed to the number of defective parts found.

Data on advertising expenditures and revenue (in thousands of dollars) for the Four Seasons Restaurant follow.

$$\begin{matrix} \text{Advertising Expenditures} & \text{Revenue}\\ \text{1} & \text{19}\\ \text{2} & \text{32}\\ \text{4} & \text{44}\\ \text{6} & \text{40}\\ \text{10} & \text{52}\\ \text{14} & \text{53}\\ \text{20} & \text{54}\\ \end{matrix}$$

Let x equal advertising expenditures and y equal revenue. Use the method of least squares to develop a straight line approximation of the relationship between the two variables.

An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation.

$$\begin{matrix} \text{Production Volume (units)} & \text{Total Cost (\$)}\\ \text{400} & \text{4000}\\ \text{450} & \text{5000}\\ \text{550} & \text{5400}\\ \text{600} & \text{5900}\\ \text{700} & \text{6400}\\ \text{750} & \text{7000}\\ \end{matrix}$$

Use these data to develop an estimated regression equation that could be used to predict the total cost for a given production volume.

To help consumers in purchasing a laptop computer, Consumer Reports calculates an overall test score for each computer tested based upon rating factors such as ergonomics, portability, performance, display, and battery life. Higher overall scores indicate better test results. The following data show the average retail price and the overall score for ten 13-inch models (Consumer Reports website, October 25, 2012).

$$\begin{array}{lcc}\text { Brand \& Model } & \begin{array}{c}\text { Price } \\ (\$)\end{array} & \begin{array}{c}\text { Overall } \\ \text { Score }\end{array} \\ \text { Samsung Ultrabook NP900X3C-A01US } & 1250 & 83 \\ \text { Apple MacBook Air MC965LL/A } & 1300 & 83 \\ \text { Apple MacBook Air MD231LL/A } & 1200 & 82 \\ \text { HP ENVY 13-2050nr Spectre XT } & 950 & 79 \\ \text { Sony VAIO SVS13112FXB } & 800 & 77 \\ \text { Acer Aspire S5-391-9880 Ultrabook } & 1200 & 74 \\ \text { Apple MacBook Pro MD101LL/A } & 1200 & 74 \\ \text { Apple MacBook Pro MD313LL/A } & 1000 & 73 \\ \text { Dell Inspiron I13Z-6591SLV } & 700 & 67 \\ \text { Samsung NP535U3C-A01US } & 600 & 63\end{array}$$

a. Develop a scatter diagram with price as the independent variable.

b. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables?

c. Use the least squares method to develop the estimated regression equation.

d. Provide an interpretation of the slope of the estimated regression equation.

e. Another laptop that Consumer Reports tested is the Acer Aspire S3-951-6646 Ultrabook: the price for this laptop was $700. Predict the overall score for this laptop using the estimated regression equation developed in part (c).

Fiedler Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the company's inventory records as of December 31, 2020.

Instructions

Greg Forda is an accounting clerk in the accounting department of Fiedler Co., and he cannot under- stand why the market value keeps changing from replacement cost to net realizable value to something that he cannot even figure out. Greg is very confused, and he is the one who records inventory purchases and calculates ending inventory. You are the manager of the department and an accountant.

a. Calculate the lower-of-cost-or-market using the individual-item approach.

b. Show the journal entry he will need to make in order to write down the ending inventory from cost to market.

c. Write a memo to Greg explaining what designated market value is as well as how it is computed. Use your calculations to aid in your explanation.

Corrs Company began operations in 2019 and determined its ending inventory at cost and at lower-of-LIFO cost-or-market at December 31, 2019, and December 31, 2020. This information is presented below.

$$\begin{array}{cccc} &\underline{\hspace{10pt}\text{Cost}\hspace{10pt}}&\underline{\hspace{2pt}\text{Lower-of-Cost-or-Market}\hspace{2pt}}\\ \text{12/31/19}&\$356,000&\$327,000\\ \text{12/31/20}&420,000&395,000\\ \end{array}$$

Instructions

a. Prepare the journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market, and a perpetual inventory system (cost-of-goods-sold method) is used.

b. Prepare journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market under a perpetual system (loss method is used).

c. Which of the two methods above provides the higher net income in each year?